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US durable goods orders rocket in July by most on record

Orders for US durable goods rocketed 22.6% over the month in July to reach $300.1bn according to the Department of Commerce, the largest increase ever on record.

The consensus estimate had been for an increase of 8%.

The spectacular rate of growth, however, was mainly down to a 318% jump in orders for Boeing jets after the UK air show to reach $70.3bn. Chicago-based Boeing received 324 orders for jets in July.

Decreases were seen in the majority of the rest of the largest categories, with the exception of orders for motor vehicles and parts, which increased 10.2% to $51bn - mainly due to a failure of the seasonal adjustment process to factor in fewer than normal factory shutdowns over the summer.

On the other hand, the increase in total orders for the month before was revised quite a bit higher to show a gain of 2.7% month-on-month instead of the 0.7% seen in the preliminary estimate.

Non-defence capital goods orders for June, excluding aircraft, were revised to an increase of 5.4% instead of the 1.4% print previously calculated.

Commenting on the above data Paul Dales, Senior US economist at Capital Economics, pointed out that he is not too concerned by the 0.8% month-on-month drop in non-transport orders (consensus: 0.5%), as it was made up for by 3% rise in June (revised up from the 0.8% originally estimated).

"Overall, with some producers starting to push up against capacity constraints and loans to businesses rising at a rapid rate, we suspect that business investment prove to be one of the economy's bright spots in the second half of this year."

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